How to Open a Business Bank Account? Steps, Guide

How to open a business bank account? This is a significant question for every business owner as opening this account helps segregate personal and business funds. Additionally, it also enables improve professionalism and eases record keeping and finance management. Furthermore, a business bank account improves the credit score and credibility of businesses and gains several rewards and benefits from banks. In this blog, we will provide a complete guide to opening a business account in any bank. To know about the specific procedure for account opening, entrepreneurs should consult the banks of their choice. 

How to Open a Business Bank Account?

Here is a step-by-step guide on how to open a business bank account:

• Apply for and Obtain an Employer Identification Number or its Equivalent
• Obtain a Tax ID number, Business License, and other required documents
• Identify the type of account suited to your business needs
• Select a bank after comparing different banks offering banking services for enterprises
• Schedule an appointment with the selected bank and discuss every detail with the respective representative
• During the appointment with the bank official, fill out the application form and submit the mandatory documents. Do not forget to read and clarify the terms and conditions of the bank.
• Most banks require clients to deposit a certain amount in a new business account to activate the account. Deposit the minimum amount and activate it
• Apply for a business checkbook
• Set up online banking services to ease daily transactions
• Order business credit cards and debit cards for convenience

Also Read: What Is A Multi-Currency Account And How Is It Helpful To Students Aiming To Study Abroad?

Documents to Open a Business Bank Account

Before considering how to open a business bank account, a business owner must ensure that they/she/he has the following documents:

• Personal Identification document, which can be any identity document issued by the government. This ID must include the photograph of the business owner.
• Address proof
• Employer Identification Number (EIN) or Social Security Number (SSN) (for US)
• Business Registration Document
• Business License
• Business Ownership Agreement
• Business Operating Agreement
• Partnership Agreement, in case of a co-owned business partnership
• Corporate Bylaws, for a corporation
• LLC (Limited Liability Company) Operating Agreement, if the enterprise is a Limited Liability Company

Things to Consider Before Opening a Business Bank Account

A business entity must consider the following options when they start thinking about how to open a business bank account:

• Access to a physical bank branch
• Monthly transaction limit
• Minimum balance requirement
• Account maintenance fees
• Customer service
• Option for wire transfers
• Rewards and benefits
• Deposit insurance
• Access to an ATM of the bank
• Option for expansion 

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Advantages of a Business Bank Account

Here are the primary reasons to open a business bank account:

• It helps a business owner demarcate between business finances and personal funds. This distinction is imperative for tax and legal purposes. 
• Using a designated bank account for business enables owners to maintain professionalism as all payments are deposited in a different bank account.
• Furthermore, a business owner can easily manage and track financial transactions by using a business bank account. This account serves as a centralized platform for bookkeeping and recordkeeping purposes. 
• Moreover, business bank accounts have provisions for several payment processing options like electronic fund transfers (EFTs), credit cards, debit cards, cheques, etc. The availability of different processing options enables payment handling and funds tracking.
• Additionally, maintaining this account helps business owners build a relationship with banks, which they can leverage to acquire business loans and improve credit lines.

Also Read: Know Everything About HSBC International Student Account

Types of Business Bank Accounts

There are four common kinds of business bank accounts. Business owners can choose any account as per their requirements and convenience. They can also open a combination of either of the accounts mentioned below.

Merchant Account

Listed below are the characteristics of a Business Merchant Account:

• It is suitable for retailers seeking a merchant service account with low fees
• It enables retailers to accept payments with Debit Cards and Credit Cards

Checking Account

Here are the key features of a Business Checking Account:

• It is ideal for daily transactions like receiving and sending payments
• It offers income and expense tracking and finance separation options
• Multiple people can be co-signer of one account

Savings Account

Given below are the properties of a Business Savings Account:

• It is apt for medium and short-term savings
• It provides interest on the earnings saved in this account

Credit Card Account 

Mentioned below are the primary attributes of a Business Credit Card Account:

• It enables spending flexibility
• It helps business owners build credit and increase their work capital

Also Read: Bank Of America Student Bank Account – Age, Minimum Balance, Requirements & Benefits

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